Manulife Is Top Lifeco Pick Among Most Analysts

Manulife Financial Corp. (MFC) emerged from fourth quarter earnings season as the top pick among Canada’s giant life insurers for a number of analysts.

RBC Capital markets analyst Andre-Philippe Hardy said in a note to clients:

We rate Manulife’s shares as Outperform, based on the company’s sales and earnings growth track record, excess capital holdings, and growth prospects in Asia.

Credit Suisse analyst Jim Bantis has a “neutral” rating on Manulife’s stock, but said the shares deserve to trade at a premium because of the “strong track record of management and diverse operating platform.”

Manulife was one of three big Canadian insurers to report profits on Thursday, announcing earnings per share of C$0.75, a few cents more than most analysts had expected. Sun Life Financial Inc.’s (SLF) earnings of C$0.98 per share were slightly below expectations, while Great-West Lifeco Inc. [GWO/TSX] said it earned C$0.60 a share, which was also slightly below what analysts had forecast.

The strength of the Canadian dollar was cited by all the insurers as a negative factor in the fourth quarter results. In coming periods, earnings are expected to be hampered by economic factors that will depress equity markets.

Desjardins Securities analyst Michael Goldberg said Manulife remains his top pick for the sector, although he reduced his target price for Manulife stock from C$48.50 to C$47.50, “to reflect our concerns about equity market weakness.”